Your savings account likely to earn more

RBI has been in talks with banks to increase the rate, now 3.5 per cent, by 50-100 basis points (bps).

Bankers involved with the discussions said this might be the first step towards deregulating the rate.

"Bankers do not want deregulation of the savings bank rate as it can push up (deposit) rates. The option for the central bank is to increase the rate," said an executive of a public sector bank. "A 50-100 bps increase is what we are ready to accept."

Your savings account likely to earn more

RBI would come out with a discussion paper on deregulation of the savings bank rate, Governor D Subbarao said recently. Banks oppose deregulation as they feel it will increase instability.

Bankers said RBI was studying the rates offered by different countries on savings deposits. In India, a savings bank account holder gets facilities such as a cheque book, unlike in most developing countries.